* oilspill Estimatedcostsandadmissibleclaimslinkedtothe PrestigePrestige

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ANALYSIS

Estimated costs and admissible claims linked to the Prestige Prestige oil spill

Maria L. Loureiro

^a,

*, Alfonso Ribas

^a

, Edelmiro López

^b

, Elena Ojea

^a

aIDEGA-Universidade de Santiago, Santiago de Compostela, Spain

bDepartment of Applied Economics, Universidade de Santiago, Spain

A R T I C L E I N F O A B S T R A C T

Article history:

Received 16 March 2005 Received in revised form 1 October 2005

Accepted 2 October 2005

Available online 23 November 2005

The current case study presents an evaluation of the societal costs caused by the Prestige oil spill. We conclude that the economic magnitude of the catastrophe caused by the Prestige oil spill is rather significant. Short-term losses in all affected economic sectors, cleaning and recovery costs, and all environmental losses accountable at this point, add to a lower bound estimate of€770.58 million (prices in 2001 currency), excluding all other financial and future possible losses. Such important losses justify future studies that assess potential costs and benefits derived from the application of preventive measures and other contingency plans.

JEL classification:

Q51 Q20

1. Introduction

Due to the frequency of large accidental oil spills, literature illustrating the economic costs and social impacts of such incidents is necessary. In spite of the existence of previous studies (Grigalunas et al., 1986; Moore et al., 1998; among others), there is still a need to better understand the magnitude and importance of previous catastrophic oil spills around the world. The present study contributes to the prior literature in two important ways: a) it presents the economic costs associated with one of the most recent and largest oil spills in history—the Prestige oil spill; and b) it introduces the valuation of other dimensions that have not been previously explored, such as the effects of the fishing bans on the canning industries and the opportunity costs of the labor force of volunteers.

These, among other factors surrounding the unique nature of the Prestige oil spill, make this study relevant in understanding the problems and limitations currently faced by environmental economists when valuing large environmental disasters.

Valuation of economic costs is important for multiple reasons. First, it may provide ex-post answers related to the adequate amount of compensation when liability issues are at stake. Liability rules aim to compensate injured parties for oil spill damages. As previously indicated in the literature, liability can be an important incentive-based instrument for prevent- ing spills and a sustainable approach for restoring coastal resources (Grigalunas et al., 1998). However, economic damage assessments may also be used as an important decision- making tool when assessing the optimal level of protection that should be employed in marine safety in order to avoid similar disasters in the future.

This paper is divided into the following sections: first, it presents a description of the accident; secondly, the losses incurred by each productive sector are presented as well as the assumptions made when computing them; finally, the total costs are computed adding up the total commercial, cleaning, recovery, and environmental losses. The last section presents the caveats and limitations of the current research, and

⁎ Corresponding author. Tel.: +34 981563100x14337; fax: +34 981599935.

E-mail addr ess: maria.loure [email protected] (M .L. Loure iro).

doi:10.1016 /j.ecolecon.2005. 10.001

a va i l a b l e a t w w w. s c i e n c e d i r e c t . c o m

w w w. e l s e v i e r. c o m / l o c a t e / e c o l e c o n

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concludes with some recommendations concerning data collection issues that may be helpful when assessing the impacts of future comparable oil spills.

2. The accident

On November 13, 2002, the single-hull, 26 year-old oil tanker, Prestige, suffered a serious accident just 46 km off the Finisterra Cape, in the Northwest of Galicia (Spain). The Prestige possessed a complicated parentage. It was owned by a Liberian company, registered in the Bahamas, and was operated by a Greek captain with a Filipino and Greek crew. It carried about 77,000 metric tons (MT) of heavy low-quality oil.

Six days after the accident, and after traveling without a clear direction outside the Atlantic coast of Galicia, the Prestige sank 222 km away from the Cies Islands on November 19, 2002, after splitting in two during a storm (SeeMap 1).

On its way to the bottom of the sea, the tanker spilled more than 60,000 MT of oil, polluting more than 1300 km of coastline. The Prestige oil spill was a very serious environmental catastrophe. It began in November 2002 and lasted for about 4 months, affecting the coasts of Northern Portugal, Northern Spain and Southern France. However, most of the oil

impacted the continental shelf and coastal zones of Galicia (region in NW Spain).

Although Galicia is well-known for its dangerous waters, in which several oil spills have occurred before (SeeTable 1), the Prestige oil spill was the most serious environmental accident ever suffered in Spanish waters. The proximity of Galicia to one of the world's busiest shipping routes, along with the presence of a refinery located in one of its largest ports (A Coruña), contribute to a high frequency of spills in the region.

In total, Galicia has suffered five out of the eleven major oil spills in Europe in the last three decades. Furthermore, during the last 30 years, the entire volume of oil spilled in these waters constituted 10% of the total of large spills in the world.

Unfortunately, due to the lack of detailed studies, the importance of previous accidents and their respective effects on local eco-systems and on the local economy have not been well documented. The only existing study that we are aware of was conducted byGarcía Negro et al. (1994), who estimated the commercial fishery losses caused to Galician society by the Aegean Sea oil spill.¹

The Galician coast, which was the most heavily affected by the Prestige oil spill, supports a large number of human settlements that are economically and culturally linked to the sea. At present, there are over 80 communities whose economies depend directly on catching fish and extracting shellfish resources. These locales range from large cities (Vigo, A Coruña, Ferrol, etc) to mid-sized towns (Muxía, Malpica, Ribadeo, etc) or small villages that often times have below 200 inhabitants. (SeeMap 2). The spill affected multiple protected N

E W

S

PRESTIGE sinking Sinking date: 19/11/02 Depth: 3500 m Position: 42^o15'N 12^o08'W

14 cracks; 1 oh them filled in Up to 125 Tn/day released

1000 0 1000 2000 Kilometers

Oil Spill 77000 Tons

Spanish affected communities

GALICIA ASTURIASCANTABRIA PAIS VASCO

Map 1– PrestigePrestige sinking in Spanish waters.

Table 1– Previous spills in Galicia (NW Spain) Ship's name Quantity

(metric tons)

Year Content

Urquiola 101,000 1976 Oil

Aegean Sea 80,000 1992 Oil

Prestige 64,000 2002 Oil–fuel

Andros Patria 16,000 1978 Oil

Polycommander 15,000 1970 Pesticides Erkowitz 200 barrels 1970 Pesticides

Casón 1100 1987 Chemical products

1During the review process of this paper, we found a new recent document published by CES-Galicia during the summer 2005, illustrating some of the costs caused by the Prestige in Galicia. The reference is:“Consideración sobre os efectos dos vertidos do fuel do buque Prestige.” Document coordinated by: M. Varela and A.

Prado. Edited by CES Galicia, Report number 01/05.

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areas and natural parks along the entire North Coast of Spain, including areas of special interest in the Autonomous Com- munities of Galicia, Asturias, Cantabria, and Basque Country.

Among the places characterized by their natural beauty, the oil affected the National Park of Atlantic Islands, the protected wetlands and marshes in Corrubedo and in Ria Eo (all in Galicia), as well as the Natural reservoir of Santoña and Noja (Cantabria), and the protected wetlands of Ria de Mundaka–

Guernika (Basque Country). These are some of the richest ornithological areas in Europe (Chas-Amil et al., 2004).

The oil spill from the Prestige arrived at the Spanish coast in three large“black waves”, contributing to the extended agony of all affected individuals. The first large wave arrived at the Galician coast on November 16, 2002, and at the time the regional authorities of Galicia issued a prohibition for inshore fishing as well as shellfish extraction (fishing and shellfish ban) in the affected area. The lack of cleanup equipment and qualified personnel made articulating a quick and effective response difficult across such a large affected area. While the oil was piling up on seashores and beaches, the second wave of oil arrived on November 20, 2002, being the worst in magnitude (with 30 km in length according to satellite images). Almost the entire Galician littoral was closed for fishing and shellfish extraction, and in most cases, the affected areas would not be re-opened until a few months later (SeeMap 3). When the Prestige sank, it was estimated that it took around 50,000 MT of its cargo of heavy oil down to the seabed. However, posterior estimations showed that only 11,000 MT remained inside the tanker, while the rest was spilled into the surrounding waters. The third oil wave arrived at the coasts on December 19, 2002, after the tanker sank.

However, until February 1, 2003, the Prestige continued to leak oil from its tanks while on the seabed, creating multiple smaller spills that arrived at the seashores. The cleanup operation continued for many months, although by summer time 2003 most of the affected beaches were cleaned.

In December 2004, after all cleaning operations were completed on the coast, a total of 97,000 MT of waste

emanating from the Prestige had been collected along the coast of Galicia, of which 78,000 MT were solid materials, and 19,000 MT were oiled waters collected by the cleaning ships. In addition, after a highly sophisticated operation took place during the summer months of 2004, the Spanish oil company

“Repsol” extracted the remaining oil inside the tanker, collecting about 11,000 MT more.

Although fingers are pointing in many directions with respect to legal responsibility, who is responsible and how much has to be paid are two very tough questions to answer. In this sense, the international regulatory system limits the amount and the scope of the compensation received by affected parties. Currently, the overall international compensation regime for damages caused by spills of persistent oil from laden tankers is regulated by the 1992 Civil Liability Compensa- tion (CLC) Fund, which entered into force in 1996. As in the case of the previous conventions, the tanker's owner and insurer are liable for payment of compensation, as well as oil receivers in countries that are party to the 1992 Fund Convention. In October 2000, the contracting states to the 1992 CLC Fund approved a proposal to increase by about 50% (to an estimated total of $260 million) the amount of compensation available under the terms of the Convention. This Supplementary Fund, which entered into force November 1, 2003 (after the Prestige oil spill), was reinforced by an additional Supplementary Compensation Fund in March 2005 that increased the international regime for compensation of victims of oil pollution from oil tankers. The Supplementary Fund does not replace the existing 1992 Fund, but does make available additional compensation to victims in the States that acceded to the Protocol. In total, about $1159 million are now available for compensation for spills occurring in States that are Members of the Supplementary Fund. This Supplementary Fund will only cover accidents occurring after March 3, 2005. However, the maximum payable amount by the 1992 Fund, with respect to an incident occurring before November 1, 2003, is $199 million. In the meantime, other countries, which have not ratified the international compensation conventions, will have their own domestic legislation for

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90 0 90 180 Kilometers

Population

# 1 Dot = 2000 N

E W

S

Main fisheries area

Affected area 15/12/2002

Map 2– Main fishery areas and population density in Galicia.

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compensating those affected by oil spills from tankers, such as the Oil Pollution Act in the US.

AsMason (2003) points out, in spite of the incremental increases in compensation, concerns still exist that environmental compensation claims are not allowed under the 1992 Fund. Thus, environmental quantifiable economic loss assessments have been opposed by the International Oil Pollution Compensation (IOPC) Fund on the basis of regulation No. 3.

This regulation asserts that“the statement of compensation to be paid by the International Oil Pollution Compensation Fund is not to be made on the basis of an abstract quantification of damage in accordance with theoretical models.” This excludes very important types of losses that are not recoverable, such as acquisition costs of “equivalent” ecosystem services in replacing severely damaged areas.

The present study covers a quantification of the short-term damages, including to the extent that the data allow it, environmental damages that are not recoverable under the

1992 CLC/IOPC rules. We attempted to quantify these damages as they are losses that society faces in terms of utility reductions when any environmental accident occurs. In order to approximate the total social damages caused, we analyze the effects of the Prestige oil spill in each of the affected productive sectors: the rich commercial fisheries and shellfish sectors, the canning and processing fish and shellfish industries, mussel production, and the tourism sector. When data were also made available for the rest of the affected Spanish regions (Asturias, Cantabria and Basque Country), we calculated the total cost of the Prestige oil spill for all of Spain. A similar methodology used in assessing economic costs was employed by researchers determining the impact of previous oil spills, such as the Amaco Cadiz (Grigalunas et al., 1986), the Sea Empress (Moore et al., 1998), and the Exxon Valdez (see Preston et al., 1990; Brown, 1992). Potential applications of other methodologies such as the Habitat Equivalence Analysis (HEA), the Resource Equivalence Analysis (REA), or Restoration 56

125

131 192 197

128 94

94

84

84 197 316

56

5656 5656

5656

N

Galicia Ria de Muros Ria de Ferrol Ria de Arousa Ria de Pontevedra Ria de vigo Costa-lucense Coruña norte Arco artabro Costa noroeste

A:

total closing period for coastal fishing per area (in days)

B:

total closing period for shelfish extraction per area (in days)

Map 3– Length of fishing and shellfish extraction bans. A: total closing period for coastal fishing per area (in days). B: total closing period for shellfish extraction per area (in days).

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Based Analysis (RBA) (as inMcCay et al. 2004; Dunford, Ginn and Desvousges (2004) and Mazzotta et al. (1994)) would provide estimates of costs needed to restore equivalent resources or the adequate amount of compensation based on bio-economic models. However, the difficulties found in some cases to properly define the baseline scenario, would call into question their accuracy in the present case study.

3. Losses in commercial fisheries and shellfish

AsCohen (1995)notes, the valuation of commercial fisheries may be complicated due to the following factors: a) there is widespread controversy among biologists regarding the mor- bidity effects of carbon-based toxicity on individual species of fish; b) the effects of the oil spill depends largely on the mobility of fish populations and, consequently the possibility of escaping toxicity; and c) the unknown effects of oil spills in the reproductive cycles of fishes and shellfish. In addition to the well-documented concerns found in previous valuation studies, the multi-gear and multi-species characteristics of Galician commercial fisheries present an added complexity; it is possible to list more than 50 species that are harvested for commercial purposes (Freire and García-Allut, 2000). Due to this rich biodiversity, statistically reliable data are only available for the species with the highest commercial values.

In previous oil spills, such as the Exxon Valdez oil spill, traditional fisheries were more homogenous and most of the species had a recorded commercial worth, hence facilitating their valuation (Cohen, 1995). In Galicia, the variety and richness of the local fisheries is such that valuation of total losses is extremely difficult, if not impossible to fully calculate.

From an economic view point, the most important species within the Galician coast are the crustaceans (the velvet swimming crab, spider crab, prawns and goose barnacle); the bivalve mollusks (several species of clams, razor clams, scallops, and cockles); and the cephalopods (octopus, cuttlefish and squid). In the rest of the Cantabric Coast the most predominant species, from an economic perspective, are the hake, blue fin tuna and anchovies. According to the statistics

released by the fisheries Department in Asturias, the species with the highest commercial value in that region are the hake, blue fin tuna, monkfish, and the blue whiting, followed by crustaceans and mollusk. In Cantabria, the most popular species are blue fin tuna, anchovies, Atlantic mackerel, and monkfish. Finally, in the Basque Country, the species with the highest commercial value are the blue fin tuna, anchovy, hake, and horse mackerel.

In order to approximate the losses caused by the Prestige in Galician fisheries, we collected detailed data on 36 species from 1998 to 2004.²These species account for 80% of the total ex-vessel volume and value commercialized in Galician fishing ports. For the rest of the Cantabric region we collected data on the most important species, as well as on the total volumes of landing and associated revenues in the fishing and shellfish extracting sectors. Although it would be more convenient to use data on stocks and catching efforts, we use total landings and their respective economic ex-vessel values to approximate the impact of the Prestige oil spill over the fisheries in an indirect way. Landings may not properly reflect the size of the fish stock. However, based on the fact that available geogra- phical statistics of biomass levels do not exactly correspond with the affected area, we prefer analyzing actual fish landings to avoid large measurement errors.

The collected statistics demonstrate that inshore fishing and shellfish were heavily affected by the spill. Table 2 presents the reductions in landings on the Northwest Coast of Galicia around Finisterre Cape (the most affected area).

Landings of inshore fishing and shellfish in this area were practically nonexistent within the first six months after the oil spill. This part of the Northwest Coast of Galicia is characterized by the predominance of artisan inshore fisheries rich in demersal fish species, crustaceans, and cephalopods. How- ever, for all of Galicia, off-shore fishing accounts for about 50%

of the total captures and ex-vessel economic values, and hence the effect of the Prestige oil spill was much acute on Table 2– Total landings of inshore fishing and shellfish captures and their respective ex-vessel value in the northwest coast area during 2002–2003 (36 species included)

Quantities (kg) Value 2003 (€)

Before Prestige 11/01–10/02

After Prestige 11/02–10/03

% Difference Before Prestige 11/01–10/02

% Difference

November 187,599 96,660 −48.48% 800,302 401.406 −49.84%

December 201,685 0 −100.00% 1,055,715 0 −100.00%

January 250,091 0 −100.00% 746,808 0 −100.00%

February 132,358 2,500 −98.11% 512,187 1,250 −99.76%

March 162,149 38,720 −76.12% 622,255 20,235 −96.75%

April 1,003,200 6,200 −99.38% 963,969 3,720 −99.61%

May 778,754 921 −99.88% 974,512 2,411 −99.75%

June 576,994 85,038 −85.26% 908,786 104,269 −88.53%

July 417,206 786,627 88.55% 1,077,595 941,081 −12.67%

August 815,818 726,687 −10.93% 1,833,325 899,253 −50.95%

September 639,549 1,059,644 65.69% 1,086,402 1,137,645 4.72%

October 506,587 n.a. n.a. 1,031,570 n.a. n.a.

Total 5,671,990 2,802,997 −50.58% 11,613,425 3,511,270 −69.77%

Source: Data gathered from Xunta de Galicia (a), access at:www.pescadegalicia.org.

2The relatively short time span of the statistics does not allow to properly forecast the estimated catch levels as it was done by Grigalunas et al. (1986).

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those local coastal communities dependent upon inshore fishing and shellfish extraction.

Tables 3 and 4show the reduction of landings in 2003 and posterior recovery in 2004 for all fish and shellfish species (including inshore, offshore fishing, and shellfish). Twenty- three out of the 36 analyzed species decreased their landings from 2002–2003 with respect to the previous year (SeeTable 4).

As expected, the sedentary species were the most affected.

Biologists are especially worried about the stocks of species

that suffered drastic reductions in landings, among them: sea urchin (with a reduction in landings of−95.1%), clam-banned carpet shell, (−50.1%), sword-razor shell (−44.04%), scallop (−42.5%), clam-pulled carpet shell (−27.9), short necked clam (−21.4%), razor clam (−18.5%) and barnacle (−15.5%). Reduc- tions in landings were also important for other fish species, including: horse mackerel (−34.3%), pouting (−27.1%), sea bass (−20.7%), sole (−16.3%), sardine (−12.8%), hake (−9.6%), blue whiting (−4.4%), and monkfish (−2.8%).

Table 3– Total landings of all fishing and shellfish captures and their corresponding ex-vessel value in Galicia during 2002–2003 (36 species included)

Quantities (kg) Value 2003 (€)

Before Prestige 11/01–10/02

% Difference Before Prestige 11/01–10/02

% Difference

November 12,349,114 8,995,320 −27.16% 30,916,810 27,540,750 −10.92%

December 10,754,222 5,699,191 −47.01% 36,675,752 21,205,564 −42.18%

January 9,083,334 4,894,248 −46.12% 24,989,145 16,802,860 −32.76%

February 9,979,099 7,396,512 −25.88% 24,043,029 18,909,273 −21.35%

March 11,459,129 9,738,649 −15.01% 24,682,839 24,328,426 −1.44%

April 13,647,478 11,038,192 −19.12% 28,201,679 25,074,146 −11.09%

May 11,636,264 9,837,437 −15.46% 27,563,762 27,398,916 −0.60%

June 10,838,146 10,201,391 −5.88% 27,062,495 25,679,626 −5.11%

July 12,185,777 13,075,804 7.30% 33,015,182 31,902,687 −3.37%

August 11,182,449 11,205,916 0.21% 32,262,681 28,886,784 −10.46%

September 11,606,465 14,082,972 21.34% 28,152,376 33,989,311 20.73%

October 11,723,186 13,249,551 13.02% 30,428,855 34,278,236 12.65%

Total 136,444,663 119,415,183 −12.48% 347,994,605 315,996,579 −9.19%

Source: Data gathered from Xunta de Galicia (a), Database PescaGalicia (www.pescadegalicia.org).

Table 4– Evolution of total landings (in kilograms) in Galicia during the period 1998–2004 (2004 contains only first 9 months available)

Name 1998 1999 2000 2001 2002 2003 2004 Total period

Clam, pulled carpet shell 1,547,046 1,611,590 1,169,430 853,798 886,286 689,764 672,467 7,430,381 Clam, banned carpet shell 145,352 120,009 303,914 276,048 298,467 157,397 128,689 1,429,876

Reló 909,670 1,005,663 738,621 968,041 1,387,370 1,000,935 1,117,788 7,128,090

Clam, grooved carpet shell 535,085 529,181 522,545 420,322 511,596 458,987 477,385 3,455,099 Common cockle 1,751,516 2,059,311 1,847,607 736,484 2,271,527 1,534,963 2,121,842 12,323,249

Short necked clam 464,993 483,065 511,681 220,550 433,884 432,994 495,137 3,042,304

Razor clam 81,460 81,799 98,854 104,089 87,960 59,087 97,318 610,567

Sword–razor shell 23,909 27,535 15,892 14,939 16,446 9,114 3,630 111,464

Scalop 27,575 1,265 60,610 830 84,934 55,212 141,890 372,316

Goose barnacle 280,191 299,020 336,817 347,062 308,116 212,121 323,254 2,106,581

Spider crab 62,012 78,482 76,809 65,783 71,781 82,818 107,776 545,460

Velvet swimming crab 46,590 38,927 44,780 36,453 36,876 43,955 45,119 292,699

Octopus 2,644,202 2,052,650 1,560,410 1,424,947 1,543,379 1,547,879 2,042,107 12,815,574

Cuttlefish 359,542 320,761 196,795 171,002 214,590 210,480 324,977 1,798,146

Pouting 949,858 1,138,671 2,063,360 1,064,250 684,351 597,463 724,722 7,222,676

Bass 115,550 112,224 138,958 99,185 81,881 53,480 134,598 735,875

White seabream 52,622 43,935 56,917 45,782 53,721 47,069 52,883 352,929

Common sole 104,402 132,219 145,371 75,130 62,843 45,680 77,855 643,499

Turbot 106,863 118,806 92,685 96,280 75,547 51,700 60,204 602,085

Sea urchin 388,874 453,924 424,945 301,678 543,232 17,744 582,763 2,713,159

Sardine 6,952,367 4,925,190 4,798,049 11,395,240 8,861,688 9,364,812 14,478,081 60,775,426 Atlantic mackerel 9,969,022 7,429,863 7,247,544 6,345,995 9,770,801 7,096,324 9,102,997 56,962,546 Blue whiting 16,507,907 16,853,811 15,953,506 12,820,836 11,696,612 7,588,529 10,703,209 92,124,408 Horse mackerel 31,715,142 21,978,376 20,771,842 18,699,380 15,281,577 12,562,294 17,316,100 138,324,711 European hake 12,722,073 15,535,979 16,557,583 10,401,032 10,015,257 9,746,113 12,192,315 87,170,351 Black belied angler 3,262,230 3,203,797 2,346,624 1,783,798 2,555,377 2,809,859 2,856,063 18,817,747

Norway lobster 929,914 986,886 599,078 493,295 554,007 553,150 808,703 4,925,033

Total 92,655,967 81,622,938 78,681,225 69,262,225 68,390,106 57,029,924 77,189,870 524,832,254 Total Galicia 136,357,278 119,803,44 116,003,98 107,063,350 101,618,141 91,471,121 113,772,289 786,089,609 Source: Data gathered from Xunta de Galicia (a), Databse PescaGalicia (www,pescadegalicia,org).

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After the reopening of fishing activities, landing volumes increased for all species in 2004. Some critics point to the fact that the fishing and shellfish extraction bans in Galicia (with a length of two to eight months) were brief in duration, and that the opening of banned areas may carry some negative effects in the long run over the stocks that have been seriously damaged. This is due to the fact that after the lifting of the bans, catching efforts were more concentrated in some fisheries than it otherwise would be. In the case of the Prestige oil spill, the fishing bans lasted from less than eleven months in the most affected areas to about two months in the South of Galicia (less affected). Bans were also applied in the rest of the Cantabric coast and in South France, although for shorter lengths, with most restrictions lifted in January 2003. In Galicia, the shellfish bans were even shorter than those applied to inshore fishing, lasting from six and a half months in the most affected areas to less than two months in South Galicia (SeeMap 3). As a comparison, after other oil spills such as the Braer (Shetland Islands, 1993) crustaceans (except lobster) were allowed to be fished after 22 months of closure, mollusks (except mussels) after 25 months, and lobsters and mussels after seven years. Following the Erika spill off Brittany in 1999, closure lasted from two to eighteen months.

After putting aside other political considerations that may contribute to the length of fishing and shellfish bans, the landing statistics indicate that in the short-run the consequences of the spill for the fishing sector were serious.

However, a longer time span would provide more detailed information. Unfortunately, the recovery of catch levels in 2004 does not necessary imply a diminishing effect of the oil spill on the fish and shellfish populations. Rather, it may point to the fact that stocks of many species were consistently over- harvested, as well as previously damaged by intensive fishing and other past spills (Freire and Labarta, 2003).

When studying the evolution of all registered landings between 2000–2004 for the 36 species analyzed in Galicia, we observe a serious reduction in seven species during this period:

bream (−70.7%), clam-banned carpet shell (−55.7%), clock clam (−21.1%), short necked clam (11.3%), blue whiting (−1.8%), and turbot (−1.1%). Nevertheless, it is difficult to isolate the effect of the Prestige oil spill from the previous declining trend. A

graphical representation of the total volume of landings of fish and shellfish in Galicia (SeeGraph 1) between 1998 and 2004 shows a decreasing trend, even prior to the Prestige oil spill.

As noted earlier, short-term effects in captures after the spill were rather important and immediate. When comparing landing volumes in 2002 and 2003 with respect to those in 2001 (the year before the spill), losses in the fish and shellfish sectors in Galicia total€38.40 million in 2002 and €41.00 in 2003.³Table 5presents a summary of the overall trend of the landings and their respective economic value in all affected Spanish regions. As the table shows, the impact of the Prestige oil spill differs among the affected areas, the most serious impacts located in Galician fisheries, followed by the damage caused in Basque Country fisheries (with associated losses of

€39.10 million during the period 2003–2002), and Cantabrian fisheries (with losses of €25.78 million during the same period). In the Basque Country, the most affected fish specie was the anchovy, changing from 19 MT of landings in 2001 to 2.78 MT in 2003, although it is not possible to differentiate the marginal contribution of the Prestige oil spill from other factors. Other specie seriously affected was the blue fin tuna.

However, the real consequences of the Prestige oil spill over fish stocks and biomass are not easy to measure in the short run, and further analysis will be needed in the future.

To net out the possible savings due to the reductions of inputs usage (labor, oil, nets, etc) during the fishing bans, we first calculated the differences of expenditures in the total inputs used by the entire fishing and shellfish sector in Galicia in 2002 with respect to 2001(Galician Institute of Statistics- Instituto Galego de Estadística, (IGE)). According to these public statistics, input usage in Galician coastal fishing and shellfish decreased by €2.22 million in 2002, with respect to 2001.

Further, salary savings of fishermen and other associated labor costs saved during roughly 45 days of fishing bans in 2002 100.000.000

110.000.000 120.000.000 130.000.000 140.000.000 150.000.000 160.000.000 170.000.000 180.000.000 190.000.000

1998 1999 2000 2001 2002 2003 2004

Year

kg.

Total Harvest

Graph 1– Evolution of total landings of fish and shellfish captures (in kilograms) in Galician Ports. Source: Data obtained from www.pescagalicia.com,Xunta de Galicia (2004a).

3However, other studies presented by the associations of fishermen indicate that real losses caused by the Prestige may have been underreported by the administration, adding up to a total of€72 million between 2002 and 2003 only. Nevertheless, in this analysis we employ official data, given that historical series are not available in other studies.

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amount to a total of€6.53 million. Magnitudes for the year 2003 are not yet published, although we could expect that savings of labor costs would be highly correlated with the length of the established extraction bans. Hence, if we assume a saving of another 45 days of effort for all fishermen, then the reduction of labor costs within the entire Galician fishing sector would amount to€6.69 million (accounting for a 2.5% inflation rate), while the estimated savings in other inputs (if proportional to that reduction in 2002) would be about€2.27 million more.

Thus, the net total loss for the entire fishery and shellfish extracting sector during 2002–2003–2004 could be approxi- mated as the accumulative loss of the value of landings minus the corresponding savings (during 2002 and 2003), adding up to a total of €63.08 million for Galicia. Employing the same methodology to net out savings and using the data provided by the different regional fishery departments, the net losses in the entire Spanish fishing sector were calculated at €112.66 million for the period 2002–2003–2004.

In addition to these fishing commercial losses there exist other extra-market damages that should also be considered, among them, those resulting from the destruction of biota (phytoplankton, zooplankton, and other multiple microorgan- isms), as well as algae used to feed many fish populations. A study conducted byValdés et al. (2003)indicated that there were no differences in the amount of biomass of phytoplankton and zooplankton found in the Galician coast after the Prestige oil spill, not even in the composition and biological cycles of zooplankton that could be understood as an effect of the Prestige oil spill. Based on these scientific findings, we

concluded that at this stage, it was no scientific evidence to include losses due to reductions of biota in our analysis.

4. Losses in mussel farming

Mussel farming is one of the most important shellfish productions in Galicia. Mussel farming occurs in the estuaries of the rivers, mainly in South Galicia. Galicia produces about 99% of all mussel harvested in Spain. In the year 2000, the total production of mussel amounted to 259,131 MT. Mussels are commercialized and exported directly by three organizations of producers. The largest organization of producers is OPMEGA, which is comprised of 1430 producers that own about 1860 mussel beds. This accounts for the 60% of the total production in Galicia. OPMEGA sells three types of mussel qualities:

mussel for the fresh market (with a quality grade of“average”

or“special”), and industrial mussel (usually of smaller size).

The industrial quality mussel is the cheapest, and is sold to canning factories and to food processing industries.

Although mussel beds were not directly soiled, news surrounding the spill, and other food safety concerns caused a reduction of prices in the fresh markets during 2003.

Consequently, in order to avoid financial losses, OPMEGA switched its commercialization and marketing strategies during 2003, pushing sales towards the canning and food processing industry, and reducing the mussels sold to the fresh market. At a first glance (SeeTable 6), prices went down slightly for the mussels graded as average or industrial quality, Table 5– Evolution of landings and value of sales in the affected northern coast of Spain

Galicia Asturias Cantabria Basque Country

Total € (in 1000) (real prices 2001)

Quantity (MT)

€ (in 1000) (real prices 2001)

Quantity (MT)

€ (in 1000) (real prices 2001)

Quantity (MT)

€ (in 1000) (real prices 2001 )

Quantity (MT)

2001 354,890,00 128,035 36,896.7341 15,806 32,577 28,607.46 91,109.96 69,982.18

2002 316,488.462 124,665 37,428.0096 18,198 27,402 25,250.36 76,889.82 51,062.12

2003 313,887.535 151,246 38,553.2615 18,288 18,020 10,738.56 66,225.46 37,627.25

2004 353,494.555 109,922 41,333.9111 16,798 26,526 9303.07

Data gathered from Xunta de Galicia (a),Department of Rural Areas and Fisheries. Government of Asturias.Department of Livestock, Agriculture and Fisheries. Government of Cantabria, andDepartment of Agriculture, Fisheries and Food. Basque Country, SEAS database.

Table 6– Mussel production from November 2002 to October 2003

Kilograms transferred between

Market shares Market prices (per kilo) Total losses (2001)

Normal Especial Industrial Normal Especial Industrial Total

November 187,385 471,667 −656,052 0.68 1.06 0.51 294,356

December 3,043,876 2,522,245 −5,566,120 0.69 1.06 0.47 2,134,532

January 2,624,813 2,063,839 −4,688,652 0.68 1.06 0.44 1,915,123

February 103,509 871,456 −974,965 0.67 1.06 0.48 525,124

March −240,662 558,281 −317,62 0.67 1.06 0.41 300,453

April 450,284 −388,068 −62,216 0.68 1.06 0.41 −128,518

May 897,114 −558,734 −338,380 0.68 1.06 0.38 −108,301

June 445,517 −45,394 −400,123 0.67 1.06 0.41 89,771

July −203,575 −428,231 631,806 0.70 1.06 0.42 −333,933

August −379,732 −166,881 546,613 0.70 1.06 0.42 −209,77

September −658,999 290,777 368,222 0.66 1.06 0.43 31,115

October −2,393,302 −504,798 2,898,100 0.66 1.07 0.49 −705,18

Total 3,876,229 4,686,159 −8,559,388 3,804,772

Source: Data gathered from OPMEGA (2004).

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and increased for the mussels graded as special quality. These price movements were mainly driven by the supply side and other market conditions after the spill.

Assuming that changes in the selling strategy were exclusively due to the Prestige oil spill, and not to any other market condition, we can account for reductions of 3,876,229 and 4,686,159 kg, respectively, in the mussels supplied to the fresh market of average and special quality, and a gain of 8,559,338 kg in the share of mussel supplied for industrial use.

Given the reductions in prices of the normal and industrial qualities, total market losses in the mussel production in the year 2003 amount to€3.804 million. Note however, that this loss does not include other financial losses that mussel farmers may have faced (such as the loss of perceived quality and reputation of their product). Other estimations made by Deloitte and Touche (2004), suggest that total damages to the sector (including image damages, losses of future income, and financial losses associated with current market losses) could add to a total of €7 million. Unfortunately, data on other associations of producers are missing, although if we assume that the rest of the producers not included in OPMEGA were equally affected, then total losses in the mussel sector would amount to€12.83 million.

5. Losses in the canning and fish processing sector

Many of the local canning and fish processing industries, that are heavily dependent on shellfish and coastal fishing, were significantly affected by the fishing and shellfish extraction bans. Consequently, some did not register any production activity (or operated only a few hours per day) until the bans were lifted. This was particularly serious for some of the small firms selling local typical products from Galicia, such as special algae, oysters, and clams.

According to official statistics, in the year 2002, the fishing industrial sector employed a total of 29,200 individuals in catching and extraction activities, and about 15,000 more in the canning, freezing and processing fish and shellfish industries (thus, about 5% of the total working population in Galicia). However, the local canning and processing industry is an important share of the total Spanish sector. In particular, about 45% of the total canning companies in Spain are located in Galicia, accounting for 80% of the total volume of sales in the sector. In estimating the damages caused to the canning and processing industries, until more data are released, we can only approximate the short-term consequences of the extraction bans by employing some assumptions. Based on information published on the main leading economic news- papers, during the year 2003,⁴ about 10% of the small fish canning firms entirely closed their operations for a duration of at least 6 months as a consequence of the extraction bans.

These small manufacturers were heavily dependent on local supply. However, most of the canning and fish processing

firms maintained their regular production rates since they are specialized in the processing of demersal fish species (tuna, mackerel, sardine) which were not as affected as shellfish and other coastal fishing species. Many large manufacturing firms in order to preserve their prior production levels changed the local supply of fish by imports from South America. Therefore, total magnitudes of revenues associated with the fish canning and processing sectors showed that in spite of the Prestige oil spill, there is a slow growth in the production volume and associated revenues. Nevertheless, as it was covered by the press and later reported by the association of canning industries (ANFACO, 2004), the smallest firms were heavily affected by the Prestige oil spill. Thus, in the absence of a spill, we could have expected an even bigger growth in the fishing and shellfish canning sector. In order to approximate the effect of the Prestige oil spill on the smallest firms, we split our dataset (ARDAN, 2004) of fishing and shellfish processing firms in deciles, such that the first decile contains 10% the total firms, which are the smallest operating firms. The evolution of the gross value added (GVA) product (value of output minus value of inputs) in this set of firms indicates that there was a decline of about 8% of the total GVA between 2003–

2002 when compared with that of 2002–2001 (SeeTable 7). This reduction amounts to a total loss of€214,081 during 2003 for this set of small firms. However, this appears a conservative estimate. Based on the performance of previous years, we could have forecasted a large market expansion of these firms, well above the 8% growth in the entire fishing and canning sector during 2003–2002. Assuming that these small firms would have increased at least their GVA by as much as the entire fishing and shellfish processing sector, the estimated losses would amount to €423,681. In addition to these domestic losses, statistics released byANFACO (2004)demonstrate that exports of fish canning products are decreasing after 2001.Table 8presents the evolution of fish exports in terms of prices (2001 price levels) and volumes. Given that the Spanish canning and fish processing sector has a GVA of about 15% of the value of the final product, we can estimate that the damages to the fish canning sector by additionally adding

€26.35 million to the previous amount (175,688 million of losses in 2002, 2003, and 2004*15%). However, the decline in exports may be attributable to a joint causation of several factors, including among them, the strong performance of the Euro currency in 2004. As such, we should acknowledge that it is difficult to quantify the reduction in exports solely due to

Table 7– Summary of main indicators of the fish and shellfish canning sector—total Galicia

10% Smallest companies

Rest Total sector

Workers 2001 46 8287 8333

Workers 2002 55 8457 8512

Workers 2003 42 9015 9057

Gross value-added 2001

1,526,636 205,804,649 207,331,285

Gross value-added 2002 (in€ 2001)

2,619,994 221,380,616 224,000,610

Gross value-added 2003 (in€ 2001)

2,405,913 249,218,655 251,624,568

Source:Ardán database, 2004.

4It was reported that fishing bans had seriously affected 10% of the firms in the canning sector specialized in local delicatessen products, mussels and clams (Source: Newspaper Cinco Dias, 01/

20/2003).